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It also sells insurance products, including commercial and personal insurance, surety bond, life, disability, and long-term care coverage products. In addition, the company offers risk management consulting services comprising alternative risk and self-insurance services, claims investigation and adjusting services, and third party administration services for self insured workers' compensation plans. Further, it provides employee benefits plan and compensation consulting services.

Additionally, First Niagara Financial Group offers wealth management services that manage client funds utilizing various third party investment vehicles consisting of stocks, bonds, mutual funds, and annuities, as well as other investment products, such as individual retirement accounts, education savings plans, and retirement plans. As of December 31, 2010 it operated 257 bank branches, including 115 in Upstate New York and 142 branches in Pennsylvania. The company was founded in 1870 and is based in Buffalo, New York.

First Niagara used the economic slowdown to expand. It merged with NewAlliance Bancshares in April of this year for $1.5 billion in cash and other considerations. After the merger, First Niagara went to $30 billion in assets, $18 billion in deposits, and 340 branches in New York, Pennsylvania, Connecticut and Massachusetts. But that wasn't enough. It then added 195 upstate New York and Connecticut branches from HSBC Bank, USA for about $1 billion. That should be completed early in 2012 and management predicts the new acquisition will be accretive to 2013 operating earnings by 10% to 11%.

To pay for the purchase, the company will raise about $775 million in common stock (roughly an additional 82 million shares) and about $375 million in debt. The new addition will almost double FNFG's presence in upstate New York. It will add about $15 billion in deposits, $2.8 billion in loans, and $4.3 billion in assets under management.

The company is doing well with its current operations. Earnings increased in 2010 to 87 cents a share. This year, 7 analysts have a consensus estimate of $1.03, then forecast $1.21 for 2012. The first half of the year shows the trends: through acquisitions and organic growth, loans and leases increased 55% to $16.1 billion. That pushed net interest income up by 50% to $403 million. Non-interest income, from sources such as banking services, insurance commissions, and wealth management, were higher by 32% to $113 million. Fee income remains a major focus of management.

The dividend is 64 cents a share for a yield of 6.5%. It takes about 85% of earnings to pay the payout. That's up from 57 cents last year. The dividend has increased each year for the last 8 years except for 2009 when it held steady. Eight years ago it was 22 cents a share. Management is successfully growing the company and the dividend. However, the latest acquisition of branches may result in more downward pressure on the stock as 82 million shares is about 28% new equity that needs to be raised.

Essential Numbers:
- Market Cap: $2.73 billion
- Trailing P/E: 13.99
- Forward P/E: 7.7
- Price to sales: 3.21
- Price to book: .72
- Profit margin: 16.77%
- Operating Margin: 41.82%
- Return on equity: 4.43%
- Return on assets: .58%
- Total cash: $351.66 million
- Total cash per share: $1.20
- Book value per share: $13.64
- Beta: .84
- 52 week price change: -15.24%
- Shares outstanding: 292.76 million
- Float: 286.22 million
- Insiders own: .82%
- Institutions own 81.1%

Investors will note that this is yet another financial service company that is selling well below book value (.72). It's also noteworthy that its return on assets is .58. The benchmark for banks is usually 1% for a well run institution. But the difference here is that the bank is expanding and that incurs high expenses that won't be repeated. Adding those assets from purchases has increased FNFG's costs that normal outright asset purchases don't. Going forward, expect return on assets to improve as efficiencies from integration take place.

- Company Web site: www.fnfg.com